Blockchain and AI in the fashion industry: the opportunity for new sustainable standards

8

October

2020

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The fashion industry is among one of the most polluting industries in the world, responsible for 8 to 10% of global carbon emission, which is more than all international flights and maritime shipping combined. Fast fashion is strongly grounded in a linear way of production, with a  supply chain expanded over different geographical regions.  Overall, the supply chain in fast fashion is very disconnected; large corporations have suppliers and manufacturers spread all over the world, which leads to a large lack of  transparency and accountability for production processes.  Much of the unsustainable practices in fashion is due to lack of traceability, transparency and accountability that corporation’ have across the supply chain.

As a result, consumers are demanding more transparency about the production process and origins of clothing.  Firms as Zara and H&M are increasingly responding  to such consumer pressures, like for instance with the launch of sustainably sourced product lines.  Nevertheless, technological innovations are providing promising solutions for the lack of transparency in the fashion industry, and enabling an opportunity for the industry to become more sustainable. Innovations like blockchain and AI can enable connectivity and share information on corporate production processes increasing traceability and transparency, transforming the standards in the industry.

Blockchain enables track & trace technology and advanced inventory management, so that the great disconnected in the fashion supply chain can be more physically connected and transparent. Fashion corporations can track the movement of raw materials, fabrics, suppliers and manufactures, which increases the accountability of various players in the production processes that normally is difficult to achieve. This enables the needed transparency that incentives new sustainable standards.  Company’s like Pantagonia and Everlane are leading  sustainable company’s in fast fashion using sustainability and transparency as a selling point creating competitive advantage.

It will be very interesting to spot how emerging technological innovations are going to impact the fashion industry. It is without a doubt that these innovations can be used to create new sustainable standards that the public is demanding. But will this opportunity be enough for corporations to truly adopt new sustainable standards and move towards sustainable change?

Sources:
DRIFT (2018) The transition to good fashion. Report for C&A Foundation and Fashion for Good. Available at https://drift.eur.nl/wp-content/uploads/2018/11/FINAL_report.pdf
Forbes, (2018)https://www.forbes.com/sites/samantharadocchia/2018/06/27/altering-the-apparel-industry-how-the-blockchain-is-changing-fashion/#67576d7329fb

The Economical Times (2019). https://economictimes.indiatimes.com/small-biz/sme-sector/from-zara-to-hm-fast-fashion-face-the-age-of-reckoning/articleshow/72120398.cms?from=mdr

Weill, P. and Woerner, S. (2013). Optimizing Your Digital Business Model. [online] MIT Sloan Management Review. Available at: https://sloanreview.mit.edu/article/optimizing-your-digital-business-model/

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Digital Transformation Project – H&M and Augmented Reality

13

October

2016

5/5 (1)

H&M is one of the largest clothing retailers world-wide, second only to Indidex, with over 4.000 stores in 64 countries and 140.000 employees. H&M is also actively embracing the online market, where they are already active in 33 countries. This increasing popularity of e-commerce and the subsequent changing customer behaviour is changing the traditional way H&M does business.

 

Regarding the changing customer behaviours and demands, a questionnaire among H&M customers was conducted to identify what advantages customers see in either online or offline shopping for clothing. For online, we found the following main advantages:

  • Convenience, shopping takes less time.
  • Quantity of the offering, online can benefit from the long-tail effect.
  • Availability of the offering, online is much more likely to have the correct sizes in store.
  • Customers like personalised offerings.
  • Transparency of product information, customers can easily check product descriptions themselves.

 

For offline, we found the following main advantages.

  • Customers can feel the product before they buy it.
  • Immediate ownership of goods, no waiting for the delivery van.
  • Less possibility of having to return the clothes.
  • Privacy concerns.

 

While, H&M’s growth strategy is to open more physical stores, our findings clearly see a great deal of customers prefer to shop online. However, H&M’s growth strategy is to open more physical stores. In order to allow H&M’s physical stores to remain relevant to both online and offline customers, we provide a solution which can help incorporate online customer expectations into the physical store.

 

For this purpose, we introduce Cisco StyleMe. This device uses a mirror that overlays the customer’s mirror image with pictures of clothing. Customers can quickly create outfits by mixing and matching a wide range of garments from the retailer’s in-store and online inventory. Cisco StyleMe also adds value by offering advice and recommending related products to customers.

 

The virtual fitting room brings several advantages from the online world into the physical stores. For example, the device allows customers to benefit from the long-tail effect by being able to display any clothes in the database. Also, as the mirror is also a display, product descriptions can be displayed conveniently on the mirror. Adding to this, the display also allows to offer personalised suggestions that go with the clothing that is being tried on. Lastly, if stores decide to limit the presence of physical clothing in their stores  (for the purpose of showcasing or demonstrations), storage space of stores can be minimised and shoplifting can be brought down significantly. In short, implementing Cisco StyleMe allows physical stores to cater to the changing customer demands.

 

The virtual fitting room concept has the potential to change H&M’s current business model. As stores do not necessarily need large storage areas and bulky showcase areas, their design can become much more compact. This opens up a whole new location segment for H&M to open stores in. We propose venues that are always busy, such as train stations, airports, city centres or popular crossings. This concept of small technology-enabled stores will give H&M a new channel to reach customers. These small stores and, more specifically, the virtual fitting rooms, will change the entire value proposition of H&M’s physical stores.

 

Curious? Check out our video as well!

Group 62: M. Hazara (352438), C.T. Heesters (371723), T. Hoes (350000), N. Kießling (437348)

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